Welcome to the October issue of the Mize Payroll Newsletter. There are just under two months to go until year-end, and we’re gearing up!


Social Security Wage Base for 2025


This is the time of year when the federal government announces cost-of-living adjustments to a myriad of dollar limits, from tax brackets to retirement plans. Here’s the first one – the Social Security wage base for 2025 will increase to $176,100. Withholding rates remain unchanged, with Social Security remaining at 6.2% and Medicare at 1.45%. Wages paid in excess of $200,000 in 2025 will be subject to the extra 0.9% Medicare tax for employees only (employers do not match this extra withholding).


State By State News

California


Garnishments – If an employer garnishes an employee’s wages but then receives a termination notice for that garnishment before paying it to the creditor, the garnished amount must be paid back to the employee within five business days of the next pay period.


No Compulsory Use of Accrued Vacation – If an employee seeks to take paid family leave, the employer may not compel that employee to use up to two weeks of accrued and unused vacation time.

Connecticut


The state’s Paid Sick Leave program is expanded to include more employers in upcoming years:


  • As of January 1, 2025, it applies to employers with at least 25 employees.
  • As of January 1, 2026, it applies to employers with at least 11 employees.
  • As of January 1, 2027, it applies to employers with at least 1 employee.

Beginning January 1, 2025, eligible employees will accrue one hour for every 30 hours worked (previously 40 hours worked), up to 40 hours per year. 

Delaware


Beginning January 1, 2025, employers enrolled in the Delaware Paid Leave plan will start withholding payroll deductions for employees contributing to the cost of the program. The total contribution rate is .8% of each employee’s in-state FICA wages, with up to half of that contribution deducted from employee pay if the employer so elects.

Employers with 25 or more employees are fully subject to the program, with reduced requirements for businesses with fewer employees.


Employees who have worked for a company for at least a year with a minimum of 1,250 hours are eligible for up to 12 weeks of Paid Leave beginning January 1, 2026.


More details about Delaware Paid Leave can be found here

Maine


All Maine employers will begin withholding Paid Leave contributions for payrolls paid on or after January 1, 2025. Employers with 15 or more employees contribute 1% of each employee’s wages, with half of the amount withheld from employee wages and the other half from employer contributions. Employers with fewer than 15 employees contribute .5% of wages and may deduct the entire amount from employee wages.

The program covers all employees with earned wages in the state and includes all forms of compensation for personal services.


Employee paid leave claims can be submitted beginning May 1, 2026.


The mechanism for employers to remit contributions to the state has not yet been finalized. Employers can sign up for updates, webinars, and plan information here.

Massachusetts


The Massachusetts Department of Family and Medical Leave has announced that the rate split between employers and employees for 2025 will remain unchanged.

Michigan


Michigan will have two minimum wage increases in 2025. The first – in accordance with the usual rate increase schedule – will occur on January 1, 2025. The second wage increase will occur on February 21, 2025 in accordance with a recent Michigan Supreme Court ruling which also phases out the tip credit rate.

  • The minimum hourly wage rate effective January 1 through February 20, 2025 will be:
  • The minimum hourly wage will increase from $10.33 to $10.56 per hour.
  • The 85% rate for minors under the age of 18 will increase from $8.78 to $8.98 per hour.
  • The tipped employee rate of hourly pay increases from $3.93 to $4.01 per hour.
  • The training wage of $4.25 per hour for newly hired employees under the age of 20 for their first 90 calendar days of employment remains unchanged.
  • The minimum hourly wage rate effective February 21, 2025:
  • The minimum hourly wage will increase from $10.56 to $12.48 per hour.
  • The 85% rate for minors under the age of 18 will increase from $8.98 to $10.61 per hour.
  • The tipped employee rate of hourly pay increases from $4.01 to $5.99 per hour.
  • The training wage of $4.25 per hour for newly hired employees under the age of 20 for their first 90 calendar days of employment remains unchanged.


Beyond 2025, the state’s minimum wage is scheduled to increase to $14.97 in 2028 in accordance with the following increments:


  • $13.29 effective February 21, 2026
  • $14.16 effective February 21, 2027
  • $14.97 effective February 21, 2028


Every October beginning in 2028, the state treasurer will calculate an adjusted minimum wage rate, increasing the minimum wage by the rate of inflation. The rate will be published by November 1 of the year it is calculated and will go into effect February 21 of the succeeding year.


More information can be found by clicking here.

New York


The New York Department of Paid Family Leave announced the Paid Family Leave (PFL) contribution rate for 2025. Employees will contribute 0.388% of their gross wages, up from 0.373% in 2024. The maximum annual contribution for 2025 is $354.53, up from $333.25 in 2024. Employees earning less than the 2025 Statewide Average Weekly Wage (SAWW) of $1,757.19 will contribute less than the annual cap, based on their actual wages.

Oregon


Recent legislation updates the amount of disposable earnings protected from garnishments for tax years 2025 through 2027. Details can be found starting on page 3 of Senate Bill 1595 by clicking here.

Pennsylvania


The employee contribution rate for unemployment for 2025 remains at 0.07% of gross wages, with no cap.


The state income tax withholding rate for 2025 will be reduced from 3.07% to 2.8%.

Minnesota


Beginning January 1, 2025, the state’s minimum wage will be $11.13 per hour for all employers not covered under a local minimum wage  ordinance, with no rate difference between large and small employers.

Montana


Beginning in tax year 2024, significant changes to Montana’s income tax system will affect filing statuses, tax brackets, and the calculation of Montana taxable income. Changes include:

  • Taxpayers must use the same filing status used on their federal tax return.
  • Montana filing requirements will follow federal tax filing requirements after considering any Montana adjustments to federal taxable income.
  • Montana will have two tax brackets based on a taxpayer’s filing status and type of income.

The state advises all employees to review their Montana tax withholding and use the state’s Withholding Calculator. To make adjustments, employees should complete a new Form MW-4 and provide it to their employer.


More details can be found here.

Washington


The City of Seattle released updated thresholds for the Payroll Expense Tax in 2025. Businesses will be subject to the tax in 2025 if they have a total Seattle payroll expense of $8,837,302 or more in 2024 and at least one employee with an annual compensation of $189,371 or more in 2025. The thresholds and tax rates are as follows.

  • If the employee’s annual compensation is between $189,371 and $504,988.
  • The tax rate is 0746% for employers with a payroll expense up to $1,262,471,757.
  • The tax rate is 1.492% for employers with a payroll expense greater than $1,262,471,757.
  • If the employee’s annual compensation is $504,989 or more
  • The tax rate is 1.811% for employers with a payroll expense up to $1,262,471,757.
  • The tax rate is 2.557% for employers with a payroll expense greater than $1,262,471,757.

Tools You Can Use

Electronic Pay Solutions


Employees like to get paid on time. Sometimes that’s harder than it might seem. With delivery issues, severe weather, and wildfires frequently in the news and maybe even your back yard, getting paychecks to employees can be difficult. That’s where electronic payroll solutions like direct deposit and pay cards can be a great solution.


Electronic pay solutions can also save you money. The costs of both printing and delivery are going up, which increases your payroll fees. With direct deposit and pay cards, employees can access their pay stubs and year-end Forms W-2 and 1095 online through the Mize payroll portal.


Read more about the benefits of electronic pay from our Insights blog by clicking here.  

Earned Wage Access

 

Even if employees get paid on time, sometimes that money doesn’t stretch until the next payday. Stuff happens – the washing machine overflows, the car breaks down, or somebody gets sick. Sometimes employees need money sooner than later, but there aren’t a lot of great options. Payday loans, overdrawing their checking account, and incurring credit card debt can chock up high fees. The employer can give a pay advance or loan, but that can put you in a difficult position.


That’s where an Earned Wage Access (EWA) program can help. EWA programs are a new employee benefit that advances employees a certain amount or percentage of their accrued wages. The employee’s next paycheck is automatically reduced by the advanced amount, with no risk or liability to the employer.


For more information about ZayZoon, the EWA program offered through Mize CPAs, click here or visit with your Mize professional.

MizeCPAS.com